An improved performance from Thomas Cook was overshadowed on Thursday by
shareholders giving the tour operator’s board a bloody nose over executive
pay.

The 172-year-old holiday giant, which has been through a turbulent two years, said its recovery plan was firmly on “track” and reported “stronger” performances in key markets, including the UK.

Harriet Green, who joined Thomas Cook last summer to lead the turnaround, said British households were demonstrating a certain “robustness” and were still booking holidays as long as they were appropriately “priced, pitched and packaged”.

However, a better-than-expected quarterly update was partially eclipsed by shareholders flexing their muscles at the group’s annual meeting over levels of pay for Ms Green and new finance director Michael Healy.

Almost a third of votes were cast against the remuneration report, marking the biggest investor rebellion so far this year.

Ms Green could receive a pay package worth nearly £3m this year, bolstered by one-off payments to compensate her for rewards lost when she left her previous employer, electronics group Premier Farnell.

The maximum bonus threshold for her first year as chief executive has been set at 225pc of her £680,000 base salary to incentivise her to reach “significant stretch targets” under the company’s transformation plan. The maximum bonus threshold will reduce to 150pc after September 30.

Thomas Cook said its remuneration decisions last year were motivated by the need to secure a “top quality” chief executive and finance director. “The board’s guiding principle is to ensure that pay reflects performance and that we do not pay for non-performance,” the group added.

In its quarterly update, covering the three months to December 31, Thomas Cook said total UK bookings for winter and summer holidays were down 3pc, but that it had significantly reduced the number of packages on offer. Bookings of mainstream holidays were down 12pc compared with an 18pc reduction in capacity. Average selling prices were up 12pc.

Ms Green, who will outline her strategy in the spring, has identified a further £60m of cost reductions on top of £100m previously announced, as Thomas Cook merges its airlines businesses in the UK, Belgium and Germany.

Pre-tax losses in the final three months of 2012 narrowed to £127.9m from £151.7m previously. Revenue dipped 7pc to £1.7bn.